Academy Advisor Spring / Summer 2021 - Now, for tomorrow - Moore & Smalley
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Academy Advisor Spring / Summer 2021 Now, for tomorrow
About MHA
MHA is an association of progressive and Our Sector Approach
respected accountancy and business advisory MHA allows clients to benefit from our in-depth
firms with members across England, Scotland sector knowledge, which adds value to the specialist
services that we can provide in accountancy, audit,
and Wales.
tax, regulatory and expert business advice.
Our member firms provide both national expertise
The MHA national not for profit team have extensive
and local insight to their clients. MHA members assist
experience working within the charity and education
clients with their needs wherever they are in the UK,
sector, acting for over 1,600 charitable and non-
as well as globally through our membership of Baker
profit organisations, including schools, academies,
Tilly International, which has a network of trusted
independent schools, Further Education institutions
advisors covering 145 territories worldwide.
and public sector bodies. As one of the three largest
auditors in the sector, we are at the forefront of sector
development and actively engage with the DfE, ESFA,
ISBL and other sector bodies to ensure our specialist
advice makes a tangible difference for our clients.
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North West MHA Tait Walker
MHA Moore & Smalley
London, South East
and Midlands
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South West
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2
Welcome to the
spring /summer
2021 edition
of Academy Advisor
Covid- 19 has significantly
impacted all areas of business
and society, not least the education
sector, affecting the operating
environment of education providers,
control environments and giving
rise to new funding streams.
This has resulted in more varied and
more complex audit arrangements.
After the deadline to submit the 2019/20 financial
statements was extended to 31 January 2021, 97.1%
of trusts managed to meet the deadline, with nearly all
having now submitted their accounts. Approximately
99% of accounts have unqualified audit opinions and
the number of qualified opinions has continued to
reduce.
Over 8% of trusts included a modified Reporting
Accountant’s report on regularity, with the most
common reasons related to: Internal financial
reporting (23%), related party transactions (16%), no
independent check of controls (11%), procurement
and tendering (6%) and alcohol (4%).
In addition, Covid-19 issues accounted for 10%.
3
As we look forward to the upcoming audit season, Following the success of our Academy Workshop
it is worth reflecting on last year’s audit and any series last year, delivered via webinar due to the
identified efficiencies or improvements highlighted social distancing requirements of Covid-19, we are
in the Audit Findings Report /management letter, delighted to announce our 2021 series will also all
to make sure there is a plan in place to address the be available as online webinars. Topics this year
audit findings over the coming year. The best way to include the updated AAD, Internal Scrutiny, the ESFA
ensure any problems in financial management are chart of Accounts and the latest Academies Financial
not flagged by auditors in the annual accounts for Handbook, which is due to be published in June.
August 2021 is to allow sufficient time to resolve any Full details of each webinar and how to book are
issues at an early stage. detailed on page 18.
Having signed off the accounts of 31 August 2020, Our clients are at the heart of everything we do, and
be sure that you have alerted your auditor to any we would like to thank you for your continued support.
request from HMRC for a corporation tax return for
31 August 2020. About 25% of Trusts receive such We hope you enjoy this latest edition of Academy
requests, so if you had a return last year, you may not Advisor. If you need further advice and support
need one this year and, similarly, this may be the first regarding any of the articles we have featured,
year for such a request. please do not hesitate to get in touch with your
regular advisor or your local office.
The good news is that the deadline for submission of
the 2020 CT600 return will usually be 31 August 2021,
but if any corporation tax is payable, the payment date Best Wishes,
is 31 May 2021, so do not delay in letting your advisor
The Education sector team
know. Even if no tax is payable, a computation and
return and suitably iXBRL tagged accounts are
required by HMRC.
What’s inside
05 07 09 10
AAD – changes Covid-19 EU Workers IT & Cyber Risks
for 2021
12 14 16 17
Going Concern SATs v MATs National Funding General updates
Formula 2021-22
17 18
Timetable for 2021
upcoming webinar series
submissions
4
Academies Accounts
Direction 2020 to 2021:
the changes
The latest Academies Accounts The main changes which Trustees and Finance staff
will need to be aware of include:
Direction was released by the
• The ‘Coketown’ model accounts is now a separate document,
Education and Skills Funding
but maintains the same contractual status as the Direction,
Agency (ESFA) on 31st March as compliance with both is a requirement of the trust’s
2021. Overall, changes to the funding agreement
content are fairly minimal and • A separate framework and guide for Auditors and reporting
accountants has also been produced to accompany the AAD
predominantly focussed on
• There is a greater emphasis and reference to ESFA’s good
improving the structure and practice guides and technical accounting definitions have
flow of the document, which been moved to the footnotes
is now split into 3 parts. • There is a new ‘Feedback from ESFA section’
As in previous years, ESFA • Trustees Report requirements – there is now greater clarity
on the content, with a new requirement for trusts which have
also expect a greater degree
had a Financial Notice to Improve
of thought on how they • Auditor opinion - There is an added section on the main types
communicate with stakeholders of audit opinion
through the Trustees’ Report • Staff costs disclosure - focussed on disclosure of ‘off-payroll’
and Governance Statement. arrangements
• Funding for educational operations - Clarification on which
funding sources should be included under each heading to
align with the AAR
A full copy can be downloaded here
• Leases - reminder to ensure correct identification, classification
and treatment of finance and operating leases
• Long-term commitments – service concession commitments,
such as payments made under secondary agreements with
local authorities, should be disclosed as part of the long-term
commitments note.
Also to note: ESFA intends to publish a Supplementary Bulletin to
the Direction and the Auditor Framework and Guide, which separately
covers matters relating to the reporting and auditing of COVID-19-
related matters. No publication date has yet been provided.
5
Key points:
Trustees’ Report - Financial Review [2.15 & 2.15] • The headings in this note have also be revised to align more
• ESFA would like Trustees to move away from using standard closely with the AAR. Therefore, some grants previously
‘boilerplate’ text in the Trustees Report and Governance reported under the heading ‘Other DfE Group grants’ no longer
Statement, in favour of a detailed commentary that reflects the meet this definition. An example is included in the model
actual position of the Trust, explaining the facts and figures in accounts document.
the financial statements in more detail. For example, Trusts • We would recommend that Trusts check their Chart of
should outline the financial position and provide an explanation Accounts to ensure this information can be separately
on how surpluses or deficits have arisen, using easy and simple provided, or if additional nominal codes are required.
language that should be widely understood by anyone without
a financial background. Trusts should avoid using standardized Leases [3.66]
text provided in the Coketown accounts and instead ensure • There is a reminder for academy trusts to ensure the correct
explanations are more relevant to the individual trust and identification, classification and disclosure of finance and
better reflect any governance, control or financial management
operating leases.
issues identified. Trusts should have enough knowledge of
the financial position in advance of receiving audited figures, Long-term commitments [3.44]
so should start the process of writing these reports at an early
• Clarification that service concession commitments, e.g.
stage.
payments made under secondary agreements with local
• Any Trust that has received a Financial Notice to Improve will authorities, should be disclosed as part of the long-term
need to provide a link to the report and detail actions taken to commitments note.
address the points raised.
• The Governance Statement should refer to any changes to Feedback
the composition of the Board of Trustees as well as the work
undertaken by the Board over the course of the year. It should ESFA are seeking feedback on the AAD from
detail how you have achieved effective oversight and held the both academy trusts and auditors via a short
management team to account and explain any difficulties. online survey you can access here
For example, the Board should ideally meet 6 times per year,
so if that has not been possible due to Covid-19, illness or Impact on Audit
other difficulties, provide an explanation of other actions taken,
As you may be aware, there has been an intense amount of
such as visits to the school, or communication via email that
scrutiny around the audit profession as a whole over the past
demonstrates how Trustees have ensured effective oversight.
few years. This has led to several changes in auditing standards
• Confirm if a governance review has taken place and what and requirements, which has resulted in an increase in the audit
actions have come out of it, and if not, explain the reasons why work required to reach our audit opinion. There is also a new
and state when the review will be undertaken. auditing standard on Going Concern and we must also consider
the possibility of fraud more rigorously. Auditors also now need
• Confirm what Internal Scrutiny has taken place during the
to disclose the work we have done to identify irregularities or
period, referencing the areas that have been reviewed (both
issues of non-compliance or fraud.
financial and non-financial), along with the actions taken to
address any findings. In terms of Going Concern, there are enhanced procedures
required for us to assess Going Concern, regardless of whether
Staff Costs disclosure [2.132]
the Trust is in financial difficulty. Auditors will require the
This note to the financial statements now needs to include details Trustees’ assessment of whether they consider the Trust is
of where the Trust has entered into an “off-payroll” agreement a going concern or not, copies of your budgets and cashflow
with someone who is not an employee, including, but not limited forecasts to cover the period of at least 12 months from the
to, where ESFA has exceptionally approved the appointment of an date of signing the financial statements (including details of any
Accounting Officer (AO) or Chief Financial Officer (CFO) under such assumptions made), your action or recovery plan to address
arrangements. The amount paid by the trust for that person’s work any deficits, expected future pupil numbers (verified by local
for the trust in this role must also be included in this note as if they authority if possible) and the latest Ofsted assessment (for all
were an employee. The prior year figure should also be reported schools if in a MAT).
and restated if necessary.
Further information on Going Concern is featured in the article
Funding for Educational Operations [2.128] on page 12.
The majority of funding for the academy sector comes from the
If you have any questions or need further advice on the AAD,
DfE and ESFA, with the largest amount being GAG. GAG must be
please get in touch with your local office.
disclosed separately in this note, with any other material amounts
listed, with any remaining sources of funding from these providers
grouped together. This would include Pupil Premium, Universal
Infant Free School Meals etc.
6
Covid-19
Covid Catch Up Premium
Last year the government announced £1 billion of funding to How this funding is used, and its effectiveness, is likely to
ensure that schools have the support they need to help all come under intense scrutiny by the ESFA, with interest from
pupils make up for missed learning caused by Covid-19. the media, other areas of government as well as parents.
The funding includes: Governors, Trustees and School leaders will need to scrutinise
plans and spending to ensure it is in line with their catch-up
• a one-off universal £650 million catch-up premium for the priorities and ensure appropriate transparency.
2020 to 2021 academic year
Summer schools funding
• a £350 million National Tutoring Programme to provide
additional, targeted support. In order to support children in catching up on missed
face-to-face learning and to support their mental health and
School funding allocations were calculated on a per pupil basis, wellbeing, ESFA are providing £200m to enable secondary
with mainstream schools receiving £80 for each pupil up to schools to deliver face-to-face summer schools this year.
year 11 and special schools and alternative provision schools
receiving £240. A typical primary school of 200 pupils should Schools are free to identify the pupils who would most
therefore receive £16,000 while a typical secondary school benefit from summer school, but a focus on incoming year
of 1,000 pupils should receive £80,000 for the 2020 to 2021 7 pupils is recommended.
academic year.
Funding will be calculated based on 50% of a school’s year
The payment schedule was split into 3 tranches: Autumn 7 cohort being offered a place on a two-week programme,
2020, Early 2021 and Summer 2021. or 100% of the cohort being offered a week-long programme
and equates to £597 per two-week place (£1791 for pupils
Schools should ensure this funding is used for specific activities in special schools or units and alternative provision).
to support their pupils’ education recovery in line with the
curriculum expectations in the actions for schools during Participation by Teachers is voluntary and, with the exception
the coronavirus outbreak guidance. While schools can use of Head Teachers, would be paid under so-called additional
their funding in a way that suits their circumstances, they are allowance rules, which are set out in teachers’ pay and
expected to use this funding for specific activities which will conditions. Schools are also able to use support staff,
help pupils catch up on missed learning, focussing particularly temporary staff, trainee teachers and volunteers.
on disadvantaged and vulnerable pupils who are likely to have
Eligible secondary schools which registered their intent by
been most affected.
7 May 2021 to run a summer school in the holidays will need
To support schools to implement their catch-up plans effectively, to confirm their plans in June. In September, schools will then
the Education Endowment Foundation, (EEF), has published be asked to confirm that the summer school has taken place
the school planning guide: 2020 to 2021 which provides further and provide information on the pupils who took part.
guidance on how schools should implement catch-up strategies,
with supporting case studies to highlight effective practice.
Schools can use catch-up premium funding to support any Further information is available here
summer catch-up provision that they are offering and can carry
funding forward to future academic years.
7
Funding to set up a digital education platform
The DfE has extended its digital education platform programme
for a further 12-months. This means that state-funded schools
in England still have the chance to apply for government-funded
support to get set up on a digital platform for remote learning
and claim the grant until the end of March 2022.
Further information is available here
National tutoring programme (NTP)
The National Tutoring Programme (NTP) is a government-
funded, sector-led initiative to support schools to address the
impact of COVID-19 school closures on the most disadvantaged
pupils through face to face or online tutoring on either a
one-to-one or group tuition basis. Managed by the Education
Endowment Foundation (EEF), the Sutton Trust, Impetus, Nesta
and Teach First, the NTP is targeted to reach pupils eligible
for Pupil Premium funding, but schools can ‘exercise their
professional judgement to determine which pupils are in most
need of support’.
The funding will subsidise 75% of the cost of tutoring, with the
remaining 25% to be made up by the school using existing funds
such as pupil premium, or it can be taken from any additional
Covid-19 catch up funding received.
Further information is available here
8
EU Workers
Applications to the EU Settlement
Scheme and the requirement for
Sponsorship Licences for EU nationals
going forwards:
Although the UK left the EU on 31 December 2020, EU
nationals have until 30 June 2021 to apply under the
Settlement Scheme. Until then, their current EU passport
or identity card is sufficient evidence of the right to work,
provided that they were in the UK prior to 23:00 on 31
December 2020.
The employer can by all means enquire as to whether the
EU national has applied under the Scheme but cannot
demand to see proof of this until 1 July 2021. This leaves
them in a bit of a predicament whereby EU nationals may
become illegal migrant workers overnight. We would
therefore advise any employer to liaise closely with any
affected staff to ensure that they are aware that they will
no longer be able to work after 1 July if they have not
applied under the Scheme.
As of 1 July 2021, in order to employ an EU national
who has not received or applied for Settled or Pre-Settled
Status, the employer will have to sponsor them on a
Skilled Worker visa.
For any current Tier 2 non-EU nationals, their current
migrant status remains the same. If and when they
extend their visas, they will move onto Skilled Worker visas.
This is a complex area and further advice from your local
office should be sought if you have any concerns.
9
IT & Cyber
Risk
Phishing, smishing, ransomware & cyber attacks As a minimum it is recommended that Trust’s should seek
The global pandemic, and in particular the resulting lockdowns, ‘Cyber Essentials’, if not ‘Cyber Essentials Plus’ certification as this
have brought into focus even more clearly, the need for effective helps to provide you with assurance that you have the essential
IT systems and processes to combat the ever-increasing IT security arrangements in place to support you in preventing a
number of cyber threats. Unfortunately, being an educational cyber-attack.
establishment delivering a public service does not mean that
there is any less risk of being the subject to some form of
IT Strategy
phishing, smishing, ransomware attack or similar, and over the
last 12 months we have become aware of all too many actual Knowing what IT systems and structures you have in place, and,
or attempted cyber-attacks on the sector. Where these have more importantly, how you are going to be developing these, is
succeeded, the impact has been significant and lasting across key to ensuring that your IT continues to support the growth and
the medium term. In the light of this, there are some key things development of the Trust. We have seen a number of examples
that Trust’s should be thinking about to reduce their overall level where there has been a lack of vision or co-ordination regarding
of cyber risk. IT services, with support services, in particular, being provided
via a range of different organisations through contracts in place
from legacy organisations. Such an approach has often led to a
lack of consistency of systems, services and support throughout
Education, Education, Education the organisation, where some parts of the Trust have not received
One of your best forms of defence will always be awareness an appropriate level of service. We would therefore recommend
of staff to the mostly likely forms of cyber-attack, particularly that as part of any review of your IT Strategy, that the levels and
in the form of phishing emails or smishing texts. Such types of IT support provided is reviewed across the Trust and
awareness may prevent an employee from opening or rationalised where possible to ensure consistency and quality of
responding to a suspicious email which could inadvertently service across the organisation.
open the door to a would-be hacker. Therefore, by keeping the
level of cyber awareness high on everyone’s agenda via the
provision of regular updates, warning messages or dedicated
Governance and Reporting
awareness sessions where required, can help to reduce the
risk. As the nature of cyber threats continues to change, it is To what extent is IT considered as one of your key risks and to
important that awareness of the different methods fraudsters what level is IT expertise represented on the Board and / or is
utilise is frequently communicated to staff. present in risk and strategy discussions? Given the increasing
dependence on IT for the delivery of services, it is important that
there is an appropriate IT voice in major discussions on strategy,
planning and investment to ensure that any decisions made are
IT Infrastructure Resilience done so with appropriate knowledge of the IT risk environment
Ensuring that your IT systems and processes are resilient within which the Trust operates.
and provide reasonable protection against cyber threats is
fundamental to safeguarding the organisation. Some of the
key processes around resilience are to ensure that:
• Patch management controls are effective
• Firewalls are in place
• Anti-virus software is up to date
• Devices and software are up to date
• Access to IT systems and process is secure.
10Key Terms
Seeking Assurance Phishing:
We would expect to see coverage of key IT processes, and,
in particular, those around cyber risk management, to feature The fraudulent practice of sending emails purporting
as part of any internal audit strategy for a Trust to enable to be from reputable companies in order to induce
the Board, via the Audit Committee, to be provided with
individuals to reveal personal information, such as
passwords and credit card numbers.
independent assurance over the effectiveness of control
arrangements. Even where such assurance is not provided
via internal audit, the Audit Committee should play a central
role in ensuring that such assurance is regularly sought and Smishing:
provided, and where weaknesses are identified, they are
addressed in a timely manner. The fraudulent practice of sending text messages
purporting to be from reputable companies in order to
induce individuals to reveal personal information, such
Whilst the level of risk can never be completely eliminated,
as passwords or credit card numbers.
the implementation and maintenance of a strong IT control
framework will help to significantly reduce both the likeli-
hood and impact of any cyber-attack on the Trust.
Malware:
If you would like any guidance or further information on es-
tablishing a comprehensive internal audit strategy or advice
Software that is specifically designed to disrupt,
damage, or gain unauthorized access to a computer
on cyber-security matters, please get in touch with your
system.
regular advisor or local office.
Ransomware:
Malware planted illegally in a computer or mobile
device that disables its operation or access to its data
until the owner or operator pays to regain control or
access.
Percentage of organisations that have identified breaches or attacks in the last 12 months
Source: Department for Digital, Culture, Media & Sport Cyber Security Breaches Survey 2021.
Based on: 1,419 UK businesses; 135 primary schools, 158 secondary schools, 57 further education colleges)
39% 36% 58% 75%
of All UK businesses of Primary schools of Secondary schools of FE colleges
11Going Concern
Academy Trusts will face tougher Auditors will evaluate an academy trust’s ability to continue
as a going concern for a period of at least 12 months
financial checks to confirm ‘Going from the date the financial statements are authorised for
Concern’ in future. Going concern is an issue – therefore normally covering a period of up to 16
accounting term which is essentially months from the balance sheet date. However, this is not
an absolute cut-off and if there are known problems in the
a view as to whether or not an entity months immediately following the expiry of this 12 month
has the resources needed to continue period, the academy trustees would be expected to have
operating and remain viable in the made appropriate disclosure to that effect. If there is an
issue, the auditors are required to consider whether this
foreseeable future. A business with needs to be reflected in their audit report.
a strong balance sheet and adequate
As Academy Trusts have a long-term funding agreement
reserves will have sufficient funds to with the Secretary of State, income is considered very
meet its obligations, such as payroll secure, but this in itself is not a sufficient basis for accounts
and trade creditors. to be prepared on a going concern basis.
For example, questions regarding short-term viability
can still arise in cases of sudden or unexpected loss of
The Financial Reporting Council has revised its ‘going
third party income which had been earmarked to fund a
concern’ auditing standard in light of a number of high-
particular project, which will now have to be met from other
profile cases where companies such as Carillion, BHS and
funds. A going concern qualification on an Academy Trust’s
Patisserie Valerie, which were on the brink of collapse,
accounts would be a cause for intervention by the ESFA.
exposed flaws in the audit approach to going concern.
The AFH stipulates that management accounts must
Guidance states that Auditors are required to demonstrate
be shared with the chair of academy trustees every
how they have challenged the academy trust’s going
month and with all trustees six times a year to discharge
concern assessment, the rigour with which they have
their responsibilities and ensure strong governance and
tested this assessment and the evidence and supporting
effective financial management arrangements. The volume
documentation obtained.
and depth of financial information provided to both the
This will mean that controls and information used to make Accounting Officer and the board will vary significantly
a going concern assessment at the academy trust will depending on the size of the academy trust and the relative
come under greater scrutiny and trusts will need to provide complexity of its organisational structure, but the important
greater granularity in their going concern assessments point to note is that the information received is accurate,
and document their assessment of going concern more relevant, timely and adequately challenged.
thoroughly than they do at the moment.
12Short term Long term
(going concern) (financial
sustainability)
Is the current year budget in deficit and, if so, how What skills does the board have in relation to
satisfied are you that steps are in place to recover strategic financial management? What training
the situation before reserves are exhausted? is undertaken? How does the board ensure it
remains up to date on financial issues?
Have we forgotten anything that would increase Do academy trustees understand the financial
our outgoings, e.g. rises in TPS employer information they are looking at and how it has
contribution rates, a rise in teachers’ pay etc.? been derived? Is there consistency in reports to
allow appropriate analysis for trends?
Does the budget for the current year break down into What benchmarking has the academy trust
a monthly analysis of all incomings and outgoings? undertaken both internally, year on year and with
other similar schools and academies?
Is there an analysis of academy trust creditors Does the academy trust have a clear budget
which demonstrates an understanding of when forecast for the next 3 or 5 years, identifying
each obligation will need to be met? spending priorities and risks and sets how these
will be mitigated?
Are there sufficient reserves to mitigate against Are assumptions, such as predicted pupil
unexpected costs? numbers, being properly scrutinised? Can
assumptions be externally verified, such as
through the local authority.
Does current GAG funding reflect actual pupil Are staffing levels likely to remain proportionate
numbers on roll? Additional funding may be due, to the cohort size over the next 3 to 5 years?
or clawed back.
We can work with you to ensure you are meeting all of your
A good practice guide on Going
financial obligations and addressing future challenges. Please
Concern is available here
get in touch if you have any concerns you would like to discuss.
13SATs v MATs
Education Secretary Gavin Williamson Schools looking to work with an established MAT, and
likewise, MATs considering taking on new schools will now
announced in March 2021 that the have the option to ‘try before you buy’. Joining a MAT can
Government wants to see far more often appear to school leaders as handing over autonomy,
schools in multi-academy trusts by but deciding if a particular MAT would be the best fit for
your trust could be determined during an evaluation period
2025 and are actively looking at ways where the impact can be monitored and evaluated in a
to make it happen. transparent and open way beforehand.
There are downsides to this approach, such as the amount
Stating that schools ‘benefit from being in a strong family’
of time and resources that would need to be invested in the
he said ‘Multi-academy trusts are powerful vehicles
process which may not achieve the desired outcome and
for improving schools by sharing expertise, working
this option may not be possible for some schools if they are
collaboratively and driving improvements.
currently in special measures, as the DfE are likely to want a
It is living proof of the old adage, a problem shared is
quicker, long term solution.
a problem halved. This is something we want to see more
of, because it shows time and again how the Working with an established MAT
multi-academy trust model consistently improves
When seeking a MAT that appears to be a good fit for
outcomes for pupils.'
your trust, there are a number of points to consider before
There is a suggestion that the single academy trust model embarking on a formal process, such as how quickly the
is under threat, so what are the benefits of joining, or MAT has expanded in the past, if any schools have left the
establishing a MAT? MAT and what Ofsted ratings each of the schools have
received. There is also a lot of useful information in the
• Resources can be pooled together to support all schools MATs financial statements published on their website,
within the MAT including the Trustees Report and Governance Statement
• Experienced Trustees and school leaders can which can help you to make a well-informed decision.
support the professional development of others within
the MAT Setting up your own MAT
SATs may prefer to set up their own MAT with at least
• Vision, ideas and collaboration between schools
one other school and with permission from the Secretary
can improve outcomes for pupils and opportunities for
of State. Trusts would need to put forward a business
staff
case and plan which outlines full details of the proposed
• Economies of scale often result in all schools receiving change, risks, assets, liabilities and any other relevant
better value for external services information. Alternatively, a SAT could apply to be a formal
sponsor of another academy, such as one with poor
• Professional fees for audit services are proportionally
performance, which wouldn’t require a separate application
lower than for a SAT.
for permission to become a MAT.
14All Trustees will need
to be fully aware of all
relevant information
before any decisions
are taken, with findings
discussed and clearly
documented in the
minutes.“
The Financial Due Diligence process Who should undertake due diligence?
A comprehensive Financial Due-Diligence (FDD) Many larger trusts will have some of the skills and
undertaking will provide the information required to expertise required to carry out certain aspects of the
enable all parties to make an informed judgement due diligence process ‘in-house’, but specialists
as to the balance of risks and opportunities and the including audit and accounting advisors, legal
terms on which to proceed. In any FDD undertaking, professionals, building surveyors and HR advisors
it is important to cover all material issues, looking are all likely to be required.
beyond the obvious and investing the time to investigate
properly in order to avoid unexpected issues later on. For schools that work closely with others around
them, and those undertaking a ‘try before you buy’
approach, there may be a temptation to conduct a
What should be investigated?
simple ‘desktop’ review, not least because of the costs
• Funding, income and expenditure profile over the involved. However, this approach can lead to many
past 3 years, including cash flow pitfalls and is easy to get wrong. All Trustees will need
• Budget position for the past 3 years and any future to be fully aware of all relevant information before any
changes that are known decisions are taken, with findings discussed and
• Forecasts of predicted pupil numbers on roll; clearly documented in the minutes. The better the
considering wider issues such as local housing FDD process, the more successful any potential
developments merger will be.
• Scrutiny of all board meeting minutes from the We are highly experienced in the education sector,
past 3 years having undertaken considerable due diligence work
• Review of all legal contracts of this nature over the past 10 years; initially in the
• Analysis on all HR contracts including any existing realms of higher education establishments and
TUPE requirements and special conditions subsequently with academies looking to merge into
a new or larger MAT. Please get in touch with your
• Inspection of the physical assets of the Academy,
regular adviser or local office if you would like an informal
such as the condition of buildings and facilities
discussion to look at the options available.
• Scrutiny of all legal documents, insurances, health
& safety audits, audit outcomes, ‘near miss’ reports
and potential liability claims
• Review of internal processes and controls
(does practice reflect policies)?
• Liabilities and any restrictions
• Skills profile of current staff and Trustees
15National Funding
Formula
The DfE has published figures for each The ‘hard’ NFF is unlikely to be implemented before 2023
as there will be a significant period of consultation before it
English state school under the National can proceed to primary legislation.
Funding Formula (NFF) until 2021-22.
Most of the funding for schools will be allocated through
The stated aim of the NFF is to remove the Schools Block. Schools will also receive money via the
high needs block, early years block and 16-19 funding block,
funding discrepancies arising from depending on the nature of their provision. Pupil premium
budgets being allocated by local funding will continue to operate as a separate grant. The
authorities by making sure school Schools Block NFF will distribute funding according to
‘pupil-led’ and ‘school-led’ factors.
budgets are set using the same criteria.
Pupil-led factors include the basic amount of funding per
The three year settlement in the 2019 Spending Round pupil and funding for additional needs delivered through
increased core schools’ funding in cash terms by £2.6 factors for deprivation, low prior attainment, English as an
billion in 2020-21, £4.8 billion in 2021-22 and £7.1 billion additional language and mobility.
in 2022-23, plus an amount of around £1.5bn a year to
School-led factors include a lump sum for each school and
cover the increase to employer pension contributions in the
funding delivered through factors such as sparsity, pupil
Teachers’ Pension Scheme.
growth and premises-related factors such as split sites,
In 2018-19, the DfE introduced a “soft” NFF. This meant the rates and PFI costs.
overall funding for schools in individual local authority areas
There is a minimum per pupil funding guarantee in place.
was determined by a new national formula but distributed
For 2020-21 this is £3,750 per pupil in primary schools and
to schools according to the existing local formula. The
£5,000 per pupil in secondary schools.
DfE’s goal is to implement a ‘hard’ NFF with a new national
formula used to determine all of individual schools’ funding. If you need any further information or would like to discuss
This will contain very little local flexibility, removing the this in more detail, please contact your regular advisor or
power to respond to local circumstances and needs. your local office.
16General updates: Dates for
the diary
Public Sector Decarbonisation Scheme (Phase 2)
Academies, multi-academy trusts and free schools currently
using a fossil-fuelled heating system which is coming to the
end of its useful life may be eligible to apply for the Public
Sector Decarbonisation Scheme, which has a strong focus
on heat decarbonisation to deliver greater carbon emission
reductions. There is £75m of grant funding available and
27th July 2021
applications can be submitted through the Salix Finance
Budget Forecast Return Outturn & 3-year
website. All projects receiving funding will need to be fully
budget forecast return
installed and working before 31 March 2022.
9th November 2021
Land and buildings collection tool (LBCT)
You can find more information about
31 December 2021
the scheme and eligibility criteria here
Audited Accounts
Audit Findings Report
Accounts submission coversheet
Annual Internal Scrutiny Report
Free period products for schools and colleges 25th January 2022
Accounts return (AAR)
To ensure that ‘no one is left behind because of their gender
or background’, all schools and colleges can order a range
31 January 2022
of free period products, including environmentally friendly
Publish accounts to 31 August 2021 in
and reusable products, and they can decide how to make
full on website
these products available to learners.
17th May 2022
Log on to the phs portal to order products and find practical
Budget forecast return outturn (BFRO)
support and guidance on the scheme on GOV.UK.
31 May 2022
File accounts with Companies House
26th July 2022
Budget forecast return 3-year (BFR3Y)
Topical Reminders!
Trusts should have published their financial statements on
their website by 28 February 2021. Please take a moment
to check they are there!
Along with the Financial Statements, trusts should also
include their:
Funding agreement, articles of association, register of
business interest, 2021 admissions appeals deadline and For Trusts which do not submit two or more of the
the 2022 admission arrangements. above returns on time, ESFA will publish the list of
those not complying on GOV.UK
The table above reflects the reinstatement of the
BFRO for 2022. This return has been suspended for
the previous two years, by dispensation, as a result
of the pandemic.
17MHA Academy
Webinars
Please join us for our 2021 series of Academy Webinars for School Business Managers, the Senior
Leadership Team, Trustees and those responsible for finance & governance matters.
Following the success of our Academy Workshop series last year, delivered via webinar due to the social
distancing requirements of Covid-19, our 2021 series will also all be available as online webinars.
Available to download: Available to register:
Academy Accounts Direction ESFA Chart of Accounts
• Outline of requirements Wednesday 9th June at 11am
• What’s changed in the latest update
• Better financial reporting programme (BFRP)
• Disclosure information
• Standardised Chart of Accounts (SCoA)
• Clarifications
• Compatible financial systems
• What we need from you
• Options for implementation
Download here
Register here
Internal Scrutiny Academy VAT Update
• Options for Internal Scrutiny available following the FRC Wednesday 23rd June at 11am
revised Ethical Standard (from 1 Sept 2020)
• VAT registration requirements
• Risk and Control Framework
• Difference between business and non-business activities
• Undertaking the Internal Audit Needs Assessment
• Taxable and exempt supplies
• Practical examples & outcomes
• How VAT recovery is calculated using partial exemption
Download here methods
Register here
Academies Financial Handbook
Wednesday 7th July at 11am
• What’s changed in the latest update
• Roles and responsibilities
• Main financial and governance requirements
• Delegated authorities
• Internal Scrutiny v Internal Audit
Register here
18Our MHA Academy
Contacts
London & South East
Bianca Silva
Partner
E: bianca.silva@mhllp.co.uk
South West
James Gare
Partner
E: james.gare@monahans.co.uk
North East
Brian Laidlow
Partner
E: brian.laidlaw@taitwalker.co.uk
North West & Midlands
Nicola Mason
Partner
E: nicola.mason@mooreandsmalley.co.uk
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